Bi-weekly mortgage payment plan may benefit consumers
11/29/2010
By Credit.com Staff
A lesser-known mortgage payment alternative is growing in popularity, as homeowners work to pay down their home loans. Many banks offer a bi-weekly payment option, in which lenders split a consumer's mortgage payment in half and deduct the payment from their bank account twice a week, rather than monthly.
The bi-weekly payment method allows consumers to pay down their mortgage more quickly by making one extra payment every year. By the end of the year, homeowners will make 13, rather than 12 mortgage payments which cuts down on their principal and interest fees over the life of their loan, according to The Los Angeles Times.
"That's a nice long-term savings," Wells Fargo spokeswoman Diane Rodriguez told the Times. "And it allows you to build equity faster, manage your budget more effectively - and you never have to worry about forgetting to mail your mortgage payment on time."
However, homeowners should ensure they have the financial means to maintain bi-weekly payments to avoid defaulting on their mortgage loan and damaging their credit score.
